Currency is the physical paper and coins issued by governments that serve as a medium of exchange, a store of value, and a unit of account. However, the word “currency” is often used interchangeably with the term “money,” which refers to a broader concept of something that functions as a medium of exchange. This includes currency, but also a wide variety of items — from gold to Bitcoin — that function as money in some sense.
Currencies can take many forms today, from the bills and coins that people hold in their hands to the balances on their bank accounts. They can also be digital — like the money that’s in an app on your phone. There are even branded currencies, such as airline and credit card points. But the name “currency” is most associated with the government-issued notes and metal coins that are circulated throughout a country’s society.
The Value of a Currency
The history of currency is a long and interesting one. It all started with bartering, as people traded goods and services for each other. But as civilization advanced, the use of money allowed wealth to build up in an individual’s account. This helped to make power less centralized in a few families, and allowed more people to get involved in trade and commerce.
The value of a currency is largely determined by supply and demand. If lots of people want to buy a currency, its value goes up; if there’s a shortage, its value decreases. Countries can manipulate the market by increasing or decreasing their currency’s supply, but this doesn’t always work.
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